Materials in which magnetic and electric order coexist-termed 'multiferroics' or 'magnetoelectrics'-have recently become the focus of much research. In particular, the simultaneous occurrence of ferromagnetism and ferroelectricity, combined with an intimate coupling of magnetization and polarization via magnetocapacitive effects, holds promise for new generations of electronic devices. Here we present measurements on a simple cubic spinel compound with unusual, and potentially useful, magnetic and electric properties: it shows ferromagnetic order coexisting with relaxor ferroelectricity (a ferroelectric cluster state with a smeared-out phase transition), both having sizable ordering temperatures and moments. Close to the ferromagnetic ordering temperature, the magnetocapacitive coupling (characterized by a variation of the dielectric constant in an external magnetic field) reaches colossal values, approaching 500 per cent. We attribute the relaxor properties to geometric frustration, which is well known for magnetic moments but here is found to impede long-range order of the structural degrees of freedom that drive the formation of the ferroelectric state.